The North American Competitiveness Agenda: An Address to the AmCham Mexico

Introduction

Good morning, ladies and gentlemen. It’s wonderful to be back in Mexico City among so many friends and business leaders.

I’d like to offer a special welcome to Ambassador Roberta Jacobson, the U.S. Ambassador to Mexico. Thank you for being here today.

It is also a pleasure to see my good friends, Ambassador Carlos Sada, Mexico’s Undersecretary for North America; and Pat Ottensmeyer, President & CEO of Kansas City Southern and Chairman of the Strategic Initiatives Working Group of the U.S.-Mexico CEO Dialogue.

I’d also like to thank the AmCham Mexico and its president, Monica Flores, for the gracious hospitality. And today I’m pleased to be able to congratulate AmCham Mexico in person on its 100th anniversary. Welcome to the centennial club!

Throughout our long histories, the U.S. Chamber of Commerce and the American Chamber of Commerce in Mexico have worked together to advance the vital partnership between our countries.

That partnership is not only vital—it is also unique. It stands apart from virtually every other relationship our nations enjoy. We don’t just share a border. We share heritage, culture, and, in many ways, destiny.

Maintaining a rocksteady strategic and economic partnership is essential to our own growth and prosperity, as well as to the strength and competitiveness of North America in the global economy.

Today, that relationship is strong.

Our bilateral trade tops half a trillion dollars annually. Tens of millions of Americans and Mexicans have a better job, an improved quality of life, and a lower cost of living because we trade and make things together. Over the past seven years, U.S. exports to Mexico grew by more than $100 billion—eclipsing gains in any other market. Meanwhile, Mexican investments in the U.S. have risen by over 200% in less than a decade.

Our relationship has helped establish North America as the world’s most competitive economic region. And, as I also told our partners in Canada on a recent trip to Ottawa, we aim to keep it that way.

The cornerstone of this mutually beneficial relationship is, of course, NAFTA—and a little later in my remarks I’ll talk about how and why we must continue to champion this agreement and consider how to modernize it.

I’ll also discuss some other areas of opportunity and challenge that will confront our nations—and how we can use them to strengthen U.S.-Mexico ties and drive growth in both of our economies.

But first I want to talk to you a little about the new environment we find ourselves in.

The U.S. Environment

When I was last in Mexico City, we were exactly one month out from the U.S. presidential election.

I met with President Pena-Nieto, as well as members of the Mexican business community as part of our U.S.-Mexico CEO Dialogue. Naturally there were many questions about what’s in store for the relationship. I cautioned patience and cooler heads then—and I bear the same message today.

We’re almost 100 days into the new administration, and here’s what we know.

First, we know that the president has surrounded himself with a top-notch team, including a number of cabinet-level officials with extensive private sector experience.

It’s an old cliché in Washington, but it happens to be true: Personnel is policy. We’ve been very encouraged by what we’ve heard in meetings with top members of the Trump administration.

I’ve recently met with Vice President Pence and Commerce Secretary Wilbur Ross, and we hosted Secretary of State Rex Tillerson at the Chamber just last week. We’ve also been pleased to see pragmatic leaders like Gary Cohn play an increasingly driving role in economic policy.

Second, we know that this administration is committed to revitalizing economic growth.

In fact, we see many new opportunities for faster growth, deeper investment, and stronger North American competitiveness.

There are bipartisan calls for major new investments in infrastructure. There’s a once-in-a-generation opportunity for tax reform that could attract more capital from around the world. We have seen the beginning of the most aggressive rollback of regulatory overreach in decades. And after years of barriers and blockades, there is a real commitment to developing our energy resources and building the infrastructure needed to move that energy—along with the rest of the American economy.

These are some of highest priorities for the U.S. business community, and we are going to seize the opportunity for real progress.

Third, we know that reality is setting in for the president, his team, and the Republican Congress.

They learned quickly—and painfully—that big priorities like health care reform will be harder and take longer than anyone thought.

We could have told them that! And, in fact, the U.S. Chamber did at the beginning of the year in our annual State of American Business address, offering cautious optimism and urging realistic expectations.

Tax reform—while still a huge opportunity that the U.S. Chamber is going to fight hard to achieve—will be a herculean task that will likely stretch late into this year. And our leaders now realize that.

There’s also growing recognition that what sounds good on the campaign trail doesn’t always work so well when confronted with the realities of governing. Whether it is the Ex-Im Bank, NATO, or labeling China a currency manipulator, the President has demonstrated a commitment to implementing policy in a pragmatic way that advances the best interests of the United States—even if that may require a divergence from the rhetoric of the campaign trail.

The President’s approach on these and other issues also demonstrates that he understands the importance of vital relationships to U.S. national security and economic growth.

We are encouraging the administration to take the same pragmatic, fact-based approach to NAFTA. We have stressed in all of our meetings with top administration officials that the U.S.-Mexico relationship be preserved and strengthened. We are open to change and improvement, but we must begin with a fundamental commitment to a thriving and interdependent U.S.-Mexico partnership.

It is our job to ensure that our leaders understand and appreciate how much of our prosperity depends on it.

Preserving and Improving NAFTA

As the debate over the future of NAFTA is unfolding, the Chamber is right in the thick of things. We’ve rolled up our sleeves and have gotten busy making our case, finding common ground, and working constructively with our leaders.

We welcome the opportunity to consider how to modernize the terms of trade between our countries to meet the realities of the 21st century. Remember, things like e-commerce and the digital economy didn’t even exist when NAFTA was negotiated more than two decades ago.

But any efforts to modernize the deal must be done the right way and guided by a few key objectives.

First and foremost, do no harm.

We must not disrupt the $1.3 trillion in annual trade that crosses our borders. Under NAFTA, Mexico and Canada are the top two U.S. export markets in the world—by a long shot. The jobs of 14 million Americans depend on the agreement. It is crucial to our manufacturing and services sectors, to U.S. farms, and to 125,000 American small and medium-size businesses.

Reverting to the high tariffs and other trade barriers that were in place before NAFTA could put at risk millions of jobs on both sides of the border. We must not allow that to happen.

Next, to avoid disrupting the flow of trade and the jobs NAFTA supports, we should amend it, not end it.

Using NAFTA’s amendment process, we can simplify and expedite these negotiations while preserving the many parts of the agreement that are working well.

U.S. negotiators should consult Congress by following the Trade Promotion Authority bill, or TPA, that the U.S. Chamber helped pass into law in 2015. TPA sets forth negotiating objectives. It already has the buy-in of lawmakers and the U.S. agriculture and business communities and would help build support in Congress.

Next, we should keep it trilateral.

Maintaining NAFTA’s three-party framework is critical, as transitioning to entirely new bilateral agreements presents real risks. Such a transition could interrupt commerce and cost jobs. In addition, introducing divergent rules—one set for trade with Canada and another for trade with Mexico—would only raise costs. That could destroy jobs and hobble our industries. That’s why it’s critical to maintain a single agreement.

Finally, we’ve got to move quickly.

Uncertainty about the future of America’s terms of trade with Canada and Mexico would suppress economic growth in both our countries. And it could spur a political reaction that would be harmful to our trade ties. I know some in this room have already experienced it firsthand.

A swift renegotiation—following the objectives I just outlined—could prevent political and economic damage.

To sum up—NAFTA can be modernized, and it can be done in pragmatic way IF we: Do no harm … amend it, don’t end it … consult Congress … keep it trilateral … and move quickly.

The Chamber will use its platform, its partnerships, and its access to promote those objectives. I’ve shared these goals with our leaders, including Commerce Secretary Ross—whose department oversees U.S. trade and investment.

And I want to assure you that—despite what you may see in the news—there is a constructive process underway behind the scenes.

The business community is playing a driving role. The Chamber is working closely with top CEOs, key industry associations, and Congressional allies to advance business interests in trade negotiations.

We will not let up until we achieve an even stronger NAFTA agreement—one that reinforces the U.S.-Mexico partnership and reasserts North American competitiveness in the global economy.

Beyond NAFTA

NAFTA may be the foundation of our partnership, but there is much we can do beyond the agreement to advance our economic ties and our standing in the world.

To ensure that we’re continuing to identify new opportunities and challenges in the relationship, there must be an ongoing dialogue—both between our governments and business communities.

The U.S.-Mexico CEO Dialogue has been an effective forum for the private sector for nearly half-a-decade. We’ll hold the 8th meeting of the Dialogue at U.S. Chamber headquarters in Washington, D.C., in June.

We’re also urging the Trump administration to continue the government-to-government High Level Economic Dialogue. The H-L-E-D helped advance strategic economic and commercial goals under the previous administration, and we hope our new government makes this platform a permanent institution.

Together, we can make progress on a number of shared priorities by engaging directly with our partners in the public and private sectors.

One is optimizing our shared border.

We need a smart, efficient, secure border to take advantage of our deeply integrated value chains, and to keep people and commerce moving. Any chokepoints—whether they’re excessive customs mandates, ineffective security measures, or burdensome or redundant regulations—can have the same detrimental impact as tariffs.

The WTO’s recently ratified Trade Facilitation Agreement will tear down a number of cross-border barriers to trade. This is a groundbreaking step for global trade. But the United States and Mexico should go farther—and actually set a new gold standard for trade facilitation.

Bi-national initiatives such as Customs Pre-Inspection Processing and Joint Inspections at a U.S.-Mexico Customs Post would help us do that.

Deploying cutting-edge technologies—such as sensors, cloud data services, and IT equipment designed to withstand rugged environments—would also improve efficiency and security.

And, by-the-way, the private sector can drive those efforts. Under the leadership of FedEx Freight President Mike Ducker—who is co-chair of the U.S.-Mexico CEO Dialogue—FedEx is doing just that. Through its SenseAware initiative, FedEx is collecting and analyzing data that both governments can use to pinpoint bottlenecks and choke points at the border.

We need to continue to work together to modernize, manage, and secure our borders; but in a way that serves the needs of our integrated economies.

Closely related is regulatory cooperation.

North America has the goods and services to move, and we can have the supply chains and the infrastructure to do it—but if it all gets tangled up in red tape, we shoot ourselves in the foot. When it comes to regulations, the “tyranny of small differences” can form a barrier to trade.

Of course we should preserve the right of each country to regulate in the interest of its public—but a little bit of coordination can create efficiencies and prevent unintentional new trade barriers. Coordination also helps regulators do their jobs better in a global economy and allows them to share the burden of enforcement.

The Chamber’s Center for Global Regulatory Cooperation is a leader in this space and promotes best practices for cross-border commerce. We need to work through regulatory differences to keep our competitive edge.

Energy cooperation is another opportunity to strengthen our bilateral relationship and increase North America’s competitiveness.

And that opportunity has never been more promising than it is right now. Both of our governments are adopting policy changes and reforms that will harness North America’s potential to be the world’s energy super power.

The private sector must ensure that we make the most of this moment.

Since 2014, the U.S. Chamber has advocated for the creation of a U.S.-Mexico Energy Business Council—and that priority became a reality last year. The bilateral council brings together government and industry leaders from both countries to discuss ways to further integrate the U.S. and Mexican energy markets.

Already, our markets are linked by pipelines, rail lines, and water ways—they should also be linked by shared data, new technologies, and 21st century mapping.

Working together with our friends in Canada, we must forge even stronger continental energy ties for our security, our growth, and our competitiveness.

A final priority I’ll mention is enhanced access to capital and financial services—particularly for disadvantaged and low-income segments of society.

In both the United States and Mexico, we should think about those with no access to banking services, or the credit needed to meet their own financial needs, or the capital to start and grow businesses.

One important way both our countries can help close that gap, create jobs, and improve economic growth is by working with the private sector to expand digital money transfers. This would not only improve transparency, but also extend affordable and accessible financial services to small-scale businesses, low-income people, and rural communities.

Ultimately, each of these priorities will drive stronger growth on both sides of the border—and growth is exactly what we need. Shared economic growth is the key to our bilateral future. Poor economic conditions only breed discontent and the desire to lay blame, often where it doesn’t belong.

Conclusion

The truth is that a stronger U.S.-Mexico partnership serves the interests of each of our countries and benefits all of our citizens through stronger growth.

Our economic fates, our standing in the world, and the prosperity of our people are linked. We must continue to work together to secure them—as friends, neighbors, and partners do.

I’m proud to say that our business communities have always worked together in that spirit of cooperation. They have always met one another with mutual respect and in pursuit of shared interests—whether at border crossings or in board rooms.

Business understands that each of our countries brings a lot to the table, and that both sides will be enriched if we work together in partnership. And we know that if we seize opportunities in trade, energy, and other priorities, we can sharpen our competitive edge in a global economy—and we can be a powerful and positive influence in the world.

Ladies and gentlemen, our perspective, our experience, and our leadership are needed now more than ever.

Our calling is not just to do business—to trade and invest and make deals. It is for us to champion and protect this vital relationship—and when necessary, to remind those in power of how rewarding our partnership has been and how bright our shared future can be … if we work together.

The U.S. Chamber of Commerce submitted the following pre-hearing brief to the U.S. International Trade Commission ahead of a hearing titled, "United States-Mexico-Canada Agreement (USMCA): Likely Impact on the U.S. Economy and on Specific Industry Sectors."

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